Homework Answers
37. Option (c) is correct
$15000 is spent for insurance of 3 years. So, yearly or annual insurance expense for all the 3 years (including this year) is:
Yearly insurance = $15000 / 3 = $5000.
38. Option (a) is correct
$15000 is paid for insurance this year.
39. Option (b) is correct
Required journal entry is :
Debit Insurance expense
Credit Prepaid insurance
40. Option (a) is correct
Prepaid insurance account is an asset account.
41. Option (c) is correct
Supplies used for $4000 is the expense for current year.
42. Option (b) is correct
Generally, an adjusting journal entry affects both the income statement and the balance sheet.
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The following information relates to questions 37, 38, and 39: DEF Cous accrual basis accounting. It...
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43. Your company, which uses accrual basis accounting, pays $18,000 in advance to cover a 3-year insurance premium...
43. Your company, which uses accrual basis accounting, pays $18,000 in advance to cover a 3-year insurance premium and debits Prepaid Insurance. How much insurance expense has your company incurred after 1 year has elapsed? a. $18,000 b. $12,000 c. $6,000 d. $0 Use the following information for Questions 44 and 45: Your company shows the following data at the end of its first year: Credit sales for the year Accounts Receivable balance Allowance for Doubtful Accounts $1,000,000 100,000 4,000...
a) Why is the accrual basis of accounting generally preferred over the cash basis? b) What...
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Please prepare an accrual basis income statement for
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43. Your company, which uses accrual basis accounting, pays $18,000 in advance to cover a 3-year insurance premium and debits Prepaid Insurance. How much insurance expense has your company incurred after 1 year has elapsed? a. $18,000 b. $12,000 c. $6,000 d. $0 Use the following information for Questions 44 and 45: Your company shows the following data at the end of its first year: Credit sales for the year Accounts Receivable balance Allowance for Doubtful Accounts $1,000,000 100,000 4,000...
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Problem 3-2A Convert cash-basis accounting to accrual-basis accounting (LO3-1, 3-2) Minutemen Law Services maintains its books using cash-basis accounting. However, the company decides to borrow $100,000 from a local bank, and the bank requires Minutemen to provide annual financial statements prepared using accrual basis accounting as part of the credit worthiness verification. During 2021, the company records the following cash flows: $61,000 Cash collected from customers Cash paid for: Salaries Supplies Rent Insurance Utilities Net cash flows $35, 100 3,100...
E3-1 Transactions using accrual accounting Terry Mason organized The Fifth Season at the beginning of February 20Y4. During February, The Fifth Season entered into the following transactions: a. Terry Mason invested $15,000 in The Fifth Season in exchange for common stock. b. Paid $2,700 on February 1 for an insurance premium on a 1-year policy. c. Purchased supplies on account, $900. d. Received fees of $28,500 during February. e. Paid expenses as follows: wages, $10,800; rent, $3,200; utilities, $1,400; and...
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900.000-80,000 Use the following for questions 37-39 T Corp has provided their accounts in alphabetical order. Use these accounts to answer the following questions. Accounts payable $10,000 Accounts Receivable 15,000 Accumulated depreciation 80,000 Cash 18,000 Common stock 300,000 Depreciation expense 40,000 Dividends 30,000 Equipment 800,000 Deferred revenue 6,000 Notes payable 250,000 Rent expense 6,000 Retained earnings 63,000 Salaries expense 256,000 Service revenue 458,000 Supplies Supplies expense 1,800 - 37. $ 33200 Total current assets 38. $120.000 Book value of the...
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Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $260,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: $ 480,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $196,000 41,000 25,000 8,000...
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